Apple Inc.’s (NASDAQ:AAPL) stock surged by up to 6% on Tuesday, reaching an intraday record, following the announcement of its AI platform, Apple Intelligence.
After a dip during and post-WWDC conference on Monday, the stock climbed as Wall Street analysts reacted positively to the announcements. “This is unprecedented capability that Apple is going to introduce, integrating AI into everyday life,” said D.A. Davidson managing director Gil Luria in an interview with Yahoo Finance.
Following the event, Luria upgraded Apple to Buy from Neutral, raising his price target to $230 from $200.
On Monday, Apple unveiled “Apple Intelligence,” marking its entry into the generative AI space. The platform will be integrated across Apple’s hardware and software products, including the iPhone, Mac, Mail, Messages, and Photos. It will be available for the iPhone 15 Pro and devices with Apple’s M1 series chips and newer this fall.
Key features include updates to Siri, allowing it to parse phones for addresses in messages or find photos based on voice prompts. Apple also introduced new software updates for iPhones, watches, and computers.
“Our experience with consumer surveys of prior iPhone launches shows that hardware upgrades are driven by a collection of feature upgrades across diverse applications,” said JPMorgan senior analyst Samik Chatterjee in a note to clients. He added that the AI features’ release will support an upgrade cycle across all devices.
The announcements followed a month of anticipation, with rumors of a partnership with ChatGPT operator OpenAI circulating. After briefly being overtaken by Nvidia (NASDAQ:NVDA), Apple is now the second-most-valuable company globally, with a market capitalization exceeding $3.1 trillion.
Despite a slow start to the year amid concerns of declining iPhone demand, Apple’s stock has risen more than 15% in the past two months. Analysts like Luria and Chatterjee foresee a significant iPhone upgrade cycle driven by the new AI features exclusive to the iPhone 15 Pro and later generations.
“As people buy new phones this holiday season, they’ll experience this great functionality,” Luria said. “They’ll showcase it to friends and family, sparking the product upgrade cycle over the next few months and quarters.”
Luria believes this will be a key catalyst for the stock moving forward. “The stock’s been flat due to a lack of revenue growth at Apple,” he explained. “Now, we anticipate that this will accelerate Apple’s overall growth from the low single digits to the mid- to high-single digits over the next year or two, driving Apple’s stock.”
Featured Image: Unsplash © Laurenz Heymann
